White House discourages layoff warnings

SAM HANANEL, Associated Press

Thursday, 4 Oct 2012 | 8:34 AM ETThe Associated Press

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WASHINGTON -- The White House is going to great lengths to discourage defense contractors from sending layoff warnings to employees in the days before the presidential election, an effort Republicans are denouncing as politically motivated.

In the latest twist, the White House Office of Management and Budget issued a memo last week saying the government would cover the costs of any contractors that might face legal trouble if they have to lay off workers due to across-the-board spending cuts that kick in Jan. 2.

That guidance satisfied defense giant Lockheed Martin Corp., which said Tuesday it would not send notices telling workers they could lose their jobs if Congress can't find a way to prevent the automatic cuts, known as sequestration.

The Obama administration has sought to quell the fear of mass defense layoffs in presidential battlegrounds like Virginia, where letters sent in early November warning about the possibility of job losses could discourage thousands of defense workers from backing the incumbent.

The government's guarantee to foot the bill for legal problems, as long as contractors heed OMB's advice to refrain from warning about lob losses, is unusual.

"I don't know of any situation where the government has done this in the past," said William Gould, a labor professor at Stanford Law School.

Under the federal Worker Adjustment and Retraining Notification Act, employers of companies with 100 workers or more are required to provide notice 60 days in advance of a plant closing or mass layoffs. Otherwise, workers can sue to collect up to 60 days of back pay.

The administration's offer has outraged Sen. John McCain, R-Ariz., who claims the White House is ignoring the law and putting the government on the hook for up to $4 billion in legal damages to workers who are laid off but fail to get adequate warnings.

"Companies have a choice whether to rely on OMB's politically motivated guidance or to comply with the law," McCain said in a statement Wednesday. "But I can assure them that I will do everything in my power to ensure that taxpayer dollars are not used to compensate contractors who do not comply with the law."

McCain says he warned Defense Secretary Leon Panetta that he would deny any transfer of funds among defense accounts to pay for legal costs associated with contractors' failure to provide 60 days advance notice of layoffs.

In July, the Labor Department told contractors it would be "inappropriate" for employers to send such warnings because it is still speculative if and where the $110 billion in automatic spending cuts might occur. By law, about half the cuts would be in defense spending.

In a statement, Lockheed Martin said it was reassured by the latest OMB guidance that any action to cut defense contracts would not occur for several months after Jan. 2. After reviewing the guidance, the company said it would not issue warning notices this year.

Gould, a former chairman of the National Labor Relations Board under President Bill Clinton, said he believes the law supports the government's position that warnings are not necessary.

"At this juncture sequestration is a possibility and nothing more, and that does not trigger the obligation to issue the 60-day notice," he said.